Form 1099-R Covid Distribution

[lsteffens]

I have a taxpayer that took a $180,000 Covid Distribution.  He has repaid $90,000.  In my mind, his taxable income from the distribution for 2020 should be $83,333.  $80,000 didn't qualify as a Covid Distribution since the limit was $100,000.  Of the $100,000 that qualified, he paid back $90,000.  The remaining $10,000 should be spread over three years, with $3,333 being taxable each year.  The software is only showing $80,000 as being taxable.  I even tried entering it as if two 1099-R's had been issued, one for $100,000 and one for $80,000.  I showed $90,000 of the $100,000 repaid, but I'm getting the same result of only $80,000 being taxable.  What am I missing here?

[qbteachmt]

Have you read the Form 8915-E instructions? As you work through the 1099-R worksheet, you mark the $100,000 as covid, and on the 8915-E..."Include on 2020 Form 8915-E any repayments you make before filing your 2020 return. Any repayments you make will reduce the amount of qualified 2020 disaster distributions reported on your return for 2020."

You are correct; this is a taxable partial distribution and a deferred amount and a repayment "rollover" assuming everything qualifies as is stated in the Form 8915-E instructions.

Here is your ProSeries Help article:

https://proconnect.intuit.com/community/individual/help/proseries-form-1099-r-faq-s/00/4853

[qbteachmt]

Oh, you didn't mention his Age.

You worded this part incorrectly: "I have a taxpayer that took a $180,000 Covid Distribution."

He took $100,000 and he took $80,000. As you correctly noted, the $80,000 is not qualified for covid distribution and might be subject to the early withdrawal penalty, too.

Or, he took multiple amounts, totaling $180k? You stated "a" as in One Time.

[rbynaker]

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@lsteffens wrote:

I have a taxpayer that took a $180,000 Covid Distribution.  He has repaid $90,000.  In my mind, his taxable income from the distribution for 2020 should be $83,333.  $80,000 didn't qualify as a Covid Distribution since the limit was $100,000.  Of the $100,000 that qualified, he paid back $90,000.  The remaining $10,000 should be spread over three years, with $3,333 being taxable each year.  The software is only showing $80,000 as being taxable.  I even tried entering it as if two 1099-R's had been issued, one for $100,000 and one for $80,000.  I showed $90,000 of the $100,000 repaid, but I'm getting the same result of only $80,000 being taxable.  What am I missing here?

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You're missing the order of operations.  Just follow the flow on Form 8915-E.  The $100K gets spread over 3 years BEFORE the repayments are applied.  So $33,333 would be taxable in 2020 without a repayment.  The repayment gets applied to the current tax return first so it offsets all of the $33K income.  The remaining repayment is carried forward.  That just leaves your non-COVID distribution of $80K taxable in 2020.  Nothing taxable in 2021.  $10K taxable in 2022 (unless repaid by then).

[qbteachmt]

"BEFORE the repayments are applied"

And we don't know if the repayments were all in 2020, all in 2021, or split across the years. The 1099-R should show any repayments.

"So $33,333 would be taxable in 2020 without a repayment. The repayment gets applied to the current tax return first so it offsets all of the $33K income. The remaining repayment is carried forward."

That's why the instructions mention if the repayment is before the tax return got filed, or you would need to amend going back to the first application of repayment, and working your way forward.

Which is why it helps to read the form instructions.

[lsteffens]

I appreciate the quick responses to my question.  I spent as fair amount of time researching before posting to this message board, including reading the instructions for Form 8915-E.  The instructions left me a little unclear on the repayment taxation component, which is why I made my post.  I really don't appreciate the comment of: "Which is why it helps to read the form instructions."  There's an old saying: "If you don't have something nice to say, don't say anything". Keep your snarky comments to yourself!

[qbteachmt]

"I really don't appreciate the comment of: "Which is why it helps to read the form instructions." There's an old saying: "If you don't have something nice to say, don't say anything". Keep your snarky comments to yourself!"

You might Not be surprised at how many people ask questions here, don't bother to click links, and ask very basic things, such as:

"I have a taxpayer that took a $180,000 Covid Distribution."

Thank you for clarifying that you have read that the Limit is $100,000 and you admit to knowing this because you read the instructions.

We are often expected to be mind-readers. We can only go off of what is put in these topics.

And to be honest with you, my response to rbynaker was, in fact, addressed to rbynaker. That reply wasn't even addressed to you. It was conversational. This is a public Discussion forum.

If you want to take it personally, then you are going to overreact to many things on this forum.